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Stacey Vanek Smith: We talked a little earlier about some of the troubles in Europe. European leaders are meeting again this week to discuss debt problems in Greece, Italy, Ireland, Portugal and Spain. Meanwhile, those countries are doing what they can to raise money. Spain is selling off a number of its assets including its National Lottery.
From Madrid, Lauren Frayer reports.
Lauren Frayer: Apart from bull-fighting, flamenco and tapas, few things are as quintessentially Spanish as gambling. Spain’s Loteria is the biggest national lottery in the world. It gave out $8 billion in prize money last year.
Fernando Fernandez is an economist at Madrid’s IE Business School.
Fernando Fernandez: We like to gamble a lot. We have this sort of confidence that at some point, something will happen and then our whole life will be changed — in a way, a very Catholic or religious idea. We believe in fate.
By tradition, Catholic orphans — thought to be less prone to cheating — sing out the winning numbers for the most famous televised drawing, called El Gordo — the Fat One. With El Gordo tickets nearly $300 a pop, the lottery’s revenues are pushing $14 billion a year. But Spain itself is in a deep recession.
So this fall, the government will sell the first 30 percent of shares in La Loteria. Fernandez says the trick will be to keep profits flowing to the government, either as a minority shareholder or through taxes.
Fernandez: Are you sure you’re going to get the same money through taxes over the medium term? So that you’re not selling the jewels of the crown now because you’re desperate, and then we see that the coffers are empty.
Spain’s lottery has an unofficial triple-A bond rating, better than Spain’s treasury, partly because when recession hits, people actually buy more lottery tickets.
Pawn brokers offer to buy gold jewelry off old ladies lining up at a lottery kiosk in downtown Madrid. Julio Alminana is out of work, but still plays the lottery. His numbers never come up, but he’s confident a big win is just around the corner.
Julio Alminana: We have hope. I want to have money to pay for my own business. I play for that. We believe in this.
And that kind of attitude is just what the Spanish government is gambling on. The IPO for the lottery is due by the first week of November.
In Madrid, I’m Lauren Frayer for Marketplace.
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